Global Daily Tax News, Brazilian High Earner Minimum Tax Proposal Progresses, (Oct 16, 2025)

On October 16, 2025, Brazil's Finance Minister, Fernando Haddad, called on the Senate to approve plans to more than double the nation's personal income tax allowance and establish a minimum tax rate of up to 10 percent on high earners.

The draft legislation was approved by the Chamber of Deputies on October 1, 2025.

Urging lawmakers' approval in the Senate, he underscored that the two measures will be revenue-neutral. He said the proposal should not be bundled with other, more contentious legislative initiatives that might prevent enactment of the changes in time for January 1, 2026.

Under Bill 1087/25, the tax-free allowance would be raised to BRL5,000 per month (USD926), while those earning between BRL5,000 and BRL7,300 would see a reduction in their tax burden.

To offset the fiscal cost of the measure, the Government intends to introduce an alternative minimum tax on the country's highest earners, ensuring they pay a tax rate of at least 10 percent on their income, including company profits and dividends.

The legislation proposes progressively greater minimum tax rates, starting for taxpayers with annual income of BRL600,000 or more, before reaching 10 percent for those with income exceeding BRL1.2m. The regime will feature a sliding scale, with a 2.5 percent rate on annual income of BRL750,000; a five percent rate on annual income of BRL900,000; a 7.5 percent rate on annual income of BRL1.05m; and a 10 percent rate on annual income from BRL1.2m. In addition, a 10 percent tax rate will be imposed on dividends income received from overseas.

While urging approval of the legislation, Haddad also underscored the importance of other tax hikes, noting that such is necessary to keep the nation's debt in check and prevent a crisis.

Haddad's comments came before the Senate's Economic Affairs Committee on October 16. Two days earlier, in a separate matter, the Senate approved a bill that expressly revokes two laws and a decree-law that regulated the social security system before the 1988 Constitution. That law must be signed off by the President before becoming law.